1. Types of real properties in Poland, which can be purchased by the foreigners:
a. Lands,
b. Lands along with buildings (as one joint property),
c. Buildings,
d. Apartment.

2. Types of entitlements toward Polish real estate:

a. Ownership – is the broadest property entitlement that includes:
- right of possession,
- right of usage (including annihilation),
- right of disposal.

b. Perpetual usufruct – the right is very similar to ownership. Lands, which are subject to perpetual usufruct, are formally owned by Polish State or State entities, although substantial rights belong to the usufructor. A perpetual usufructor (a natural or legal person) can possess, use and dispose of the right to the property. Moreover, the buildings, which were erected on the lands, which are subject to perpetual usufruct, are owned by the perpetual usufructor. The perpetual usufruct agreement is concluded for 99 years or – in some exceptional cases – for 40 years.

c. Share in the building with assigned apartment – the right to the apartment in Poland might source from ones entitlement to share in the land or buildings, which consist of apartments. In that particular situation:
- share in the main property usually reflects size of the apartment,
- share in the main property indicates entitlement to particular unit/apartment.
This type of entitlement to apartment is rather unpopular due to its complicated nature. Besides type of entitlement is rather weak as in reality it is co-ownership of building (hand with building) rather than solo ownership of separated unit/apartment.
It is a relic of Polish People’s Republic. The character of share of property can cause some legal consequences, for example a foreigners can buy an apartment without a permit, but the permit is necessary when he/she wants to purchase share in property.

d. Cooperative member’s ownership right in an apartment – a right towards an apartment, which formally belongs to the housing cooperative. As a rule, it is very similar to ownership – it includes right of possession, usage and disposal. The right is transferrable, inheritable and enforceable.

e. Cooperative housing tenancy right – a right towards an apartment, which belongs to the housing cooperative. As a rule, it is very similar to lease – it includes right of possession and usage, but not right of disposal. The right is untransferable, noninheritable, and unenforceable.

3. The acquisition of real estate by the foreigners:

a. Who has to obtain a permit?

The acquisition of real estate by a foreigner requires a permit. The foreigner, within the meaning of Act of 24 March 1920 on the acquisition of real estate by the foreigners is:

- natural person without Polish citizenship;
- legal person based abroad;
- non-corporate company of persons referred to in points 1 or 2, based abroad, established in compliance with the legislation of foreign states,
- legal person and non-corporate commercial company based in the territory of the Republic of Poland, controlled directly or indirectly by persons or companies referred to in points 1, 2 and 3.

As a rule, it is not required to obtain the permit in case of foreigners who are citizens or business operators in the states being parties to the agreement on the European Economic Area or the Swiss Confederation.

The permit is issued upon request of the foreigner if:
- the acquisition of real estate by the foreigner does not pose any risk to the defensiveness, national security or public order and is not in contradiction with social policy and public health considerations,
- the foreigner proves that there are the circumstances confirming its bonds with the Republic of Poland.

Who issues a permit?

The permit is issued by way of an administrative decision by the Minister of Interior, if the Minister of National Defence does not raise any objection and in case of agricultural real estate, if the Minister of Rural Development does not raise any objection. The objection is expressed, by way of a decision, within 14 days from the day of providing a request by the Minister of Interior. The refusal to issue the permit not require any application to the Minister of National Defence or the minister responsible for rural development.

What does the procedure of obtaining a permit look like?

1. The foreigner should file an application for issuing the permit, which should contain:
- designation of the applicant and its legal status,
- designation of real estate,
- designation of the seller,
- determination of the legal form of the acquisition,
- information about the purpose and possibility of the acquisition of real estate.

2. Prior to the issuance of the permit, the Minister of Interior may:
- request further evidences or information necessary to consider the application,
- perform, also with the assistance of competent government administration bodies, verification whether the acquisition of real estate by the foreigner would not pose any risk to national security or public order and whether it is in line compliant with the interest of the State.

3. The Minister of Interior may impose, in the permit, special requirements for the foreigner intending to acquire real estate. In such case the permit would be conditioned and effective upon fulfilment of the conditions.

4. The permit is valid for two years from the day of issuance thereof.

Are there any exceptions to obligation to obtain the permit?

Mainly the following do not require the permit:
- Acquisition of a separate residential apartment,
- Acquisition of a separate garage unites or share in such units,
- Acquisition of real estate by the foreigner residing in the Republic of Poland for at least 5 years upon permanent residence permit or European Community long-term residence permit,
- Acquisition by the foreigner, being a spouse of a Polish citizen and residing in the Republic of Poland for least 2 years upon permanent residence permit or European Community long-term residence permit, of real estate that as a result of the acquisition shall constitute spousal joint property,
- Acquisition by legal person or other similar entity for its statutory purposes, of undeveloped real estate whose total area in the entire country does not exceed 0,4 ha in cities.

Caution! The acquisition of real estate by the foreigner in violation of the provisions of the Act is invalid.

4. Examination of the legal status of real estate prior to purchase:

Examination of the legal status of real estate, which is disclosed in open public registers, is very important from the perspective of the buyer’s safety. First of all, if the purchaser does not exercise due diligence towards to examination of public registers, he will not be able to rise an argument that he did not know about e.g. encumbering with a mortgage or a right to a life annuity. Secondly, verification of the registers (especially the Area Development Plan) allows finding out if the purchasing property could be used in compliance with the buyer’s plans.

a. The Land and Mortgage Register:

What is the Land and Mortgage Register?

Land and Mortgage Register is a public register carried out by relevant Departments of District Courts. Land and Mortgage Register is carried on only for immovable properties.

Each real property has its own land registry files. These files are divided into four sections – each of them refers to a different aspect of legal status of the real property:
- The first one includes designation of the real property and entries of rights, which are related to ownership, e.g. servitudes,
- The second one includes entries relating to ownership and perpetual usufruct,
- The third one includes entries relating to: limited property rights (with the exception of mortgages), limitations on disposal of the real estate or perpetual usufruct, other rights and claims (with the exception mortgage claims),
- The fourth is designed for disclosing mortgages.

The principles governing the functioning of the Land and Mortgage Register:

The principle of:
- openness of the Register to the public – everybody has access to them,
- entry – entry confirms only the existence of the right (it is only of declarative character),
- presumptions states that “the right revealed in the Land and Mortgage Register is entered in accordance with the actual state of legal affairs, and the right deleted does not exist” (the presumption is challengeable),
- reliability of the Register – the person, who, in the course of a paid legal act, acquires in good faith the property right entered into the Register, acquires this right even if the person transferring the right did not, in fact, have the right to transfer it, but the transferor was entered into the Register as the entitled person,
- priority of limited property rights entered into the Register – such rights have priority over rights not entered into the Register.

What if the real property does not have its files in Land and Mortgage Register?

It can happen that the real property does not have files in Land and Mortgage Register, because the Register has lost, been destroyed or it has never existed. In such a case, the District Court keeps for the real property so-called “document archive”. Nevertheless, under the Act of 6th July 1982 on Land and Mortgage Registers and on Mortgage, the owner of the property is obligated to set the Land and Mortgage Register. If the owner did not fulfil this obligation, he would be liable for damage resulting from his negligence.

b. The Land and Property Register – is a public register, which contains detailed information on lands, buildings and apartments and their owners (or entities, who dispose these real properties). Data, which are included into the Register, are basis for town planning or for determining the amount of property tax.

c. The Area Development Plan (the Land Utilisation Plan/Spatial Development Plan) – a document (in the form of resolution), which is adopted by the commune council. It determines conditions of land development and localisation of public-purpose investments. The Plan consists of a text part and a graphic part (maps). The provisions of the Plan are binding on the buyer of real estate. For example, if the purchaser buys a land, which according to the Plan is assigned for industrial facilities, he could not built a house thereof.

5. Tax obligations in respect to acquisition of real estate:

a. Civil Law Transactions Tax:

The buyer is obligated to pay Civil Law Transactions Tax. However, this obligation will occur only when the purchaser buy a real estate on the secondary market. Otherwise, the transaction will be tax according to VAT rate. A tax rate of Civil Law Transactions Tax in relation to acquisition of real properties amounts to 2 % of the market value of the property. A notary public, who concludes a notarial deed of acquisition of real estate, collects the tax.

c. Real Property Tax:

The buyer is obligated to notify local authorities (a commune head or a mayor of the town) of acquisition of real estate within 14 days of the acquisition. The notification should be done with the use of a standardised form. Upon this notification, competent tax authorities determine the amount of property tax in the form of an administrative decision. The failure to perform this obligation causes penal-fiscal liability. Taxpayers pay the real property tax in quarterly instalments (to 15th March, 15th May, 15th September and to 15th November).

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